Buy-to-let can still be a solid long-term investment, but the rules changed a lot in 2025–26 and the numbers are less forgiving than they were. Getting the finance, tax, compliance and property choice right from the outset is what separates a profitable let from a stressful one. This guide brings the essential landlord tips up to date for 2026 — including the Renters’ Rights Act, the current tax position and the compliance you can’t skip.
Last reviewed: 7 August 2026. Tax and rates change — treat figures as a guide and confirm the current position on GOV.UK.
Key takeaways
- Since 1 May 2026 the Renters’ Rights Act 2025 has replaced fixed terms with periodic tenancies and abolished Section 21 — factor this into your strategy.
- The buy-to-let/second-home SDLT surcharge is now 5%, and mortgage interest gets only a 20% tax credit.
- Budget realistically for voids, maintenance, insurance and rising compliance costs — aim for a genuine contingency fund.
- Meet compliance from day one: gas, electrics, EPC, deposit protection and alarms.
- Choose the property for the tenant and the numbers, not for how it looks.
Buy-to-let in 2026: the key numbers
1. Know the current rules
The biggest recent change is the Renters’ Rights Act 2025. Since 1 May 2026 every assured shorthold tenancy has become an open-ended periodic assured tenancy, Section 21 “no-fault” eviction is gone, and possession runs through the Section 8 grounds. Tenants can leave on two months’ notice, rent rises once a year via a Section 13 notice, and rental bidding is banned. Coming next: a PRS Database landlords must register on (expected from late 2026) and a Landlord Ombudsman (mandatory membership expected by 2028). Build your model around indefinite tenancies rather than a fixed annual churn.
2. Get the finance right
A buy-to-let mortgage is not a residential one — using the wrong product breaches the terms. Expect to put down around 25% (sometimes more), and lenders assess the loan against rent using a stress test, typically wanting rent of around 125–145% of the mortgage interest at a stressed rate. Get a mortgage agreement in principle early so you know your budget and look serious to sellers. Model the deal at a higher interest rate than today’s, not the headline rate, so a rate rise doesn’t wipe out your margin.
3. Understand the tax
Tax is where many landlords’ returns quietly leak away, so plan for it:
- Stamp duty: a 5% higher-rate surcharge applies to additional residential properties in England & Northern Ireland, on the whole price — use our buy-to-let SDLT calculator. Scotland (LBTT/ADS) and Wales (LTT) differ.
- Income tax: rental profit is taxed at your marginal rate (20/40/45%). Mortgage interest no longer reduces taxable profit — instead you get a 20% basic-rate tax credit, which hits higher-rate landlords hardest.
- Capital gains tax: on selling, residential property CGT is 18% (basic rate) or 24% (higher rate), with a £3,000 annual exempt amount.
- Making Tax Digital: from April 2026, landlords with gross property income over £50,000 must keep digital records and file quarterly — see our MTD guide. The threshold falls to £30,000 (2027) and £20,000 (2028).
- Limited company: holding property in a company can change the tax picture (corporation tax, full interest deductibility) but adds cost and complexity — take advice.
4. Meet compliance from day one
Non-compliance is expensive and, post-Section 21, can also block possession. Your core duties:
- Gas: annual gas safety check by a Gas Safe engineer; copy to tenants within 28 days.
- Electrics: an EICR at least every five years.
- Energy: a valid EPC of at least band E now, with a proposed rise to band C towards 2030.
- Deposit: capped at five weeks’ rent (under £50k annual rent) and protected within 30 days, with prescribed information served.
- Alarms: a smoke alarm on every storey and a CO alarm in any room with a fixed combustion appliance; serve the How to Rent guide.
5. Buy the right property
Buy for the tenant and the numbers, not for how it would suit you. Match the property to a clear target tenant — families want space and school catchments; professionals want location and low maintenance; students want proximity and affordability. Weigh rental yield against capital growth: flats and northern cities tend to give higher yields, family houses stronger long-term growth (our guide to houses vs flats covers the trade-off). Check the tenure, lease length on flats, and any existing tenancy you’d inherit.
6. Budget for the real costs
The headline price is only the start. Build in landlord insurance, maintenance and repairs, void periods, letting-agent fees if you use one, and a contingency fund (a few months’ rent) for the unexpected. A property that looks profitable on rent-versus-mortgage alone can lose money once these are counted, so run the full numbers before you offer.
7. Negotiate on the numbers
As an investor you have an edge: no emotional attachment and, often, no chain. Research recent sold prices, understand why the seller is selling, make an evidence-based offer, and be prepared to walk away if the deal doesn’t hit your target return. Discipline on price is what protects your yield.
FAQ
How much stamp duty do I pay on a buy-to-let?
In England and Northern Ireland you pay the standard SDLT plus a 5% higher-rate surcharge on additional residential properties, applied to the whole price. Scotland and Wales have their own systems. Use a current calculator for the exact figure.
Can I still deduct mortgage interest?
Not from your rental profit. Individual landlords instead get a 20% basic-rate tax credit on mortgage interest, which reduces the benefit for higher-rate taxpayers. A limited company can deduct interest in full but has other costs.
Does the Renters’ Rights Act affect new landlords?
Yes. Since 1 May 2026 all tenancies are periodic with no fixed term, Section 21 is abolished, and possession is via Section 8. A PRS Database and Landlord Ombudsman are also being introduced.
What rental yield should I aim for?
There’s no single target, but many landlords look for a gross yield comfortably above the cost of finance with room for costs and voids. Higher yields are more common on flats and in northern cities; family houses trade yield for capital growth.
Written by the Landlords Portal team — experienced UK landlords covering the private rented sector. This article is general information for UK landlords, not financial, tax or legal advice; take professional advice before investing.
